Co-Founder-President-CEO, HealthView Services, Topsfield, Massachusetts.
On demystification: "It's critical to explain today's exponentially more complicated products to consumers so they can make decisions...Firms who do that are going to be the big winners."
The enormously controversial, divisive issue of health care reform has been on everyone's radar screen for a year at the very least. But why do financial advisors typically ignore health-care costs when helping retirement-planning clients?
"It's the elephant on the table," according to Ron Mastrogiovanni, president-CEO of HealthView Services, a computer software and asset management company he co-founded about two years ago to encourage FAs to address the matter.
For 12 years, the enthusiastic Mastrogiovanni, 58, ran the money management group at FundQuest, a firm similar in construct to HealthView that he and two others launched in 1993. By the time they sold it to BNP Paribas Group in 2005, he'd expanded the company to more than $12 billion in managed assets for some 80 institutional clients.
The veteran portfolio manager hatched the idea for HealthView while looking after his aged parents, both of whom required round-the-clock medical care.
"If a couple who's now in their late 50s reach age 90," he says, from his Topsfield, Mass., office, north of Boston, "they'll be spending [with inflation] a staggering $20,000 apiece annually -- including supplemental insurance -- for out-of-pocket medical expenses. And that doesn't even cover long-term care, like nursing homes. Isn't that incredible?"
Mastrogiovanni, known for his entrepreneurial savvy, has stewarded a number of small high-tech firms to high profitability.
"Ron has probably the best sales instincts and ability to analyze people's needs of anybody I've ever known in my life -- and I'm 63. He understands how to develop products and services around opportunities," says Bill Butcher, formerly FundQuest's senior vice president, now senior VP of money managers at Natixis Global Associates.
HealthView's main customers are big banks and insurance companies, but versions of its unique software are available direct to financial advisors.
One such program assesses an individual's heath risks, projecting customized out-of-pocket costs based on health history. The software even accounts for, say, future complications a Type 2 diabetic might suffer.
But health care is only one element under the HealthView umbrella. Based on a collaboration with the Retirement Income Industry Association (RIIA), the firm offers software that calculates an investor's all-important "income floor." That minimum determines the funds needed to be invested in conservative asset classes to guarantee that fixed and variable expenses -- including health care -- are covered in retirement, regardless of market and economic calamities.
Other assets are invested "for the upside" in traditional vehicles. "We can help populate the portfolio to achieve investment goals," Mastrogiovanni adds. "When you get to a certain age, you can't just look at investing in general terms. You need to ensure that a specific percentage of assets is secure. Our system ensures that investors will have what they need for basic expenses in retirement even if we have another major [financial meltdown]."
He continues. "Health care expenses aren't a variable. People think that Medicare is the equivalent of what they have while they're working. It's not: Your employer is picking up about 75 percent of the total cost...The numbers are [shocking] when you push it out 20 or 25 years."
Chelsea, Mass.-born and reared, Mastrogiovanni -- a first-generation Italian-American -- was an inner-city street kid who'd rather hang with the guys than hit the books. ("I was a clown. I liked to fool around a lot.") He stayed out of serious trouble but "when I look at where I could have ended up," he says, "it's a fine line."
His father, who worked in Raytheon's missile division, and his stay-at-home mom of three hounded him about higher education. Despite mediocre grades, he managed to get accepted to Boston State College (now the University of Massachusetts). There, he morphed into a diligent student and earned a Bachelor of Arts degree in urban planning in 1974.
After two years as a planner in the public sector -- following an unforeseen gig unloading freight trains at The New England Produce Center -- Mastrogiovanni contracted what he calls "entrepreneurial fever" and enrolled in Babson College. In 1978, he received an MBA.
He planned to enter financial services, but a job in the burgeoning computer field was the only one offered him. That was lucky, he says. At Computer Sciences Corp., he learned the ropes and soon became a stand-out selling computer time-sharing. He later moved to Wang Laboratories, then began working with small start-up tech companies, including Ideal Associates.
"That's when I really got the [entrepreneurial] bug," he notes. Before launching managed accounts firm FundQuest, Mastrogiovanni was president of The Parker Company, management consultants.
His overall aim with HealthView is to simplify financial planning at a time when investment products are increasingly complex; e.g., bond funds embedded within annuities. "It's more difficult for the industry to make it simple than complicated," he remarks.
Plus, "there isn't a financial planner in the country who doesn't want their retirement-planning clients to have a better idea of what their real expenses will be and how much has to be invested a certain way to ensure having those assets," he says. "That makes advisors' lives a lot easier and gives them a competitive edge."
Mastrogiovanni's own edge as a business owner? "Listening to what the marketplace is telling you, then making changes to your original idea. If you can eat crow every now and then, and are willing to persevere," he says, "you can do extremely well."
Photo by Jason Grow, Wonderful Machine